Correlation Between Ecolab and Koppers Holdings
Can any of the company-specific risk be diversified away by investing in both Ecolab and Koppers Holdings at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Ecolab and Koppers Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ecolab Inc and Koppers Holdings, you can compare the effects of market volatilities on Ecolab and Koppers Holdings and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Ecolab with a short position of Koppers Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecolab and Koppers Holdings.
Diversification Opportunities for Ecolab and Koppers Holdings
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ecolab and Koppers is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Ecolab Inc and Koppers Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Koppers Holdings and Ecolab is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Ecolab Inc are associated (or correlated) with Koppers Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Koppers Holdings has no effect on the direction of Ecolab i.e., Ecolab and Koppers Holdings go up and down completely randomly.
Pair Corralation between Ecolab and Koppers Holdings
Considering the 90-day investment horizon Ecolab Inc is expected to generate 0.78 times more return on investment than Koppers Holdings. However, Ecolab Inc is 1.27 times less risky than Koppers Holdings. It trades about 0.21 of its potential returns per unit of risk. Koppers Holdings is currently generating about 0.13 per unit of risk. If you would invest 24,952 in Ecolab Inc on November 29, 2024 and sell it today you would earn a total of 1,695 from holding Ecolab Inc or generate 6.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ecolab Inc vs. Koppers Holdings
Performance |
| Timeline |
| Ecolab Inc |
| Koppers Holdings |
Ecolab and Koppers Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecolab and Koppers Holdings
The main advantage of trading using opposite Ecolab and Koppers Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecolab position performs unexpectedly, Koppers Holdings can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Koppers Holdings will offset losses from the drop in Koppers Holdings' long position.| Ecolab vs. Linde plc Ordinary | Ecolab vs. PPG Industries | Ecolab vs. Sherwin Williams Co | Ecolab vs. LyondellBasell Industries NV |
| Koppers Holdings vs. H B Fuller | Koppers Holdings vs. Minerals Technologies | Koppers Holdings vs. Quaker Chemical | Koppers Holdings vs. Oil Dri |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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